Although coronavirus infection rates may be low in Africa, revenue authorities should still consider measures to protect their employees and soften the economic blow on taxpayers as COVID-19 spreads, a major African tax body said.
In guidance published April 8, the African Tax Administration Forum (ATAF) suggested several ways in which revenue authorities across the continent could respond to the growing health crisis. These include measures to ensure their own business continuity and staff health, as well as actions to alleviate taxpayer compliance burdens and obligations as they deal with the pandemic.
“African countries are fortunate as the pandemic has not affected the continent to the extent that it has devastated other parts of the world,” ATAF Executive Secretary Logan Wort said. “This gives us a window of opportunity to learn from the lessons of countries who are further along the curve in their battle against COVID-19.” He also noted that some African countries, such as Kenya, Mauritius, Nigeria, and South Africa, have already adopted some measures outlined in the guidance, and that more countries are likely to follow as the pandemic worsens across the continent.
The guidelines suggest carrying out risk assessments to evaluate threats to the health and safety of employees and taxpayers, which could include monitoring virus transmission rates and reconsidering operational processes in light of health authority recommendations such as social distancing.
Revenue authorities should consider how the pandemic could reduce operational efficiency and interfere with taxpayer services, and prepare contingency plans accordingly, the ATAF said.
After conducting risk assessments, revenue authorities may want to come up with potential best-case, midpoint, and worst-case scenarios. In each scenario, the revenue authority should identify essential and nonessential activities and examine which ones should be done remotely or in the office. Staff should also receive the necessary information and communications technology resources for remote work, which must ensure taxpayer confidentiality, the ATAF added.
Other suggestions to ensure smooth business operations include implementing clear governance arrangements and regularly updating staff about any new measures the revenue authority might put in place.
All taxpayer services, such as registration, tax return filing, and payment, should be provided digitally to limit physical contact with taxpayers to ensure the safety of both staff and the public, the ATAF suggests.
To help alleviate the burden on taxpayers, revenue authorities should consider extending tax filing and payment deadlines; offer flexible tax payment plans; expedite tax refunds; and suspend penalties and interest for late tax filings. The guidance also suggests that revenue authorities temporarily suspend all compliance and enforcement activities, or limit such activities under specific circumstances, such as clear-cut cases of fraud.
Temporarily reducing tax rates; providing tax relief in the form of tax deductions, tax allowances, and tax rebates; and temporarily exempting or zero-rating essential goods and services subject to VAT could help taxpayers deal with the crisis, the guidance says.
“The advent and pervasive spread of COVID-19 is a health and economic threat to both the taxpayers, revenue authorities, and sovereign states,” the guidance adds. “Therefore, it is important that the revenue authorities take all necessary steps in collaboration with relevant stakeholders to actively play [their] part in ensuring that the people and economy is protected.”
The ATAF guidance is the latest advice coming from major tax administration bodies around the world. The OECD Centre for Tax Policy and Administration on March 21 published suggested tax policy and tax administration responses to the crisis as part of the OECD’s COVID-19 policy response hub. It also created a regularly updated database of tax policy measures that more than 90 jurisdictions have adopted so far, and published guidance on April 3 to clarify the tax-treaty-related cross-border implications of extraordinary government responses to the coronavirus crisis.
Moreover, the OECD Forum on Tax Administration (FTA) published a reference document on March 31 focused on tax administration responses to support taxpayers. On April 7 the FTA posted guidance outlining measures tax administrations might consider to ensure continued business operations during the pandemic, which could be a long-duration crisis. That report drew on input from members of the FTA, as well as members of the Intra-European Organization of Tax Administrations and the Inter-American Center of Tax Administrations.